Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Oil Down, Ukraine and Russia Resume Talks, China Demand Fears Grow

Published 03/29/2022, 12:26 AM
Updated 03/29/2022, 12:31 AM
© Reuters.

By Gina Lee

Investing.com – Oil was down on Tuesday morning in Asia, continuing the previous day’s downward trend as Ukraine and Russia look to continue peace talks. Fears that a COVID-19 lockdown in Shanghai, China could impact fuel demand also contributed to the losses.

Brent oil futures dropped 1.13% to $108.25 by 12:25 AM ET (4:25 AM GMT) and WTI futures fell 1.12% to $104.77. Brent and WTI contracts lost around 7% on Monday.

Ukraine and Russia will resume peace talks in Turkey later in the day, the first in over two weeks since Russia invaded Ukraine on Feb. 24.

"Oil prices are under pressure again on expectations for a peace talk between Ukraine and Russia, which could lead to an easing of sanctions or avoidance on Russian oil by the West," Nissan Securities general manager of research Hiroyuki Kikukawa told Reuters.

"A successful ceasefire could also raise the prospect of reviving an Iranian nuclear deal," he added.

Fuel demand in China, the world’s largest oil importer, also remains a concern as the city of Shanghai remains under a two-stage, nine-day lockdown to curb rising numbers of COVID1-9 cases.

"Selling pressure grew on concerns that China may impose more restrictions in other places to contain the pandemic and fuel demand may be reduced further," NLI Research Institute senior economist Tsuyoshi Ueno told Reuters.

"Increased market volatility has made it difficult for long-term investors to participate, as short-term investors tend to take profits or cut losses more quickly than before," he added.

The Organization of the Petroleum Exporting Countries and allies (OPEC+) will also meet on Thursday, where it will likely stick to plans for a modest increase in oil output in May 2022, several sources close to the group told Reuters. This is despite the surging prices due to the war in Ukraine and calls from the U.S. and other consumers to increase supply.

Global demand has risen back to pre-COVID-19 levels, but the market remains tight as OPEC+ has been slow to restore supply cuts enacted at the beginning of the pandemic in 2020. U.S. oil exports have climbed after Russia's invasion of Ukraine, and barrels of domestic oil that would typically go to the Cushing, Oklahoma, storage hub are instead being exported via the Gulf Coast, according to traders.

Investors also await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.

Latest comments

How in the world does Ukraine believe a word Russia says after destroying their country infrastructure, just leveling their homes and apartment buildings, Mariopol is a Third World city. Putin even says he doesn't consider Ukrainians worth being here, his word is "exist." Toughen the sanctions once these talks fail and before Russi goes straight into Kyiv to topple govt, in a most brutal way. Oil blood money stop NOW, Europe. Thats the only sanction that'll actually do anything to stop Putin Please 🙏
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.